The ouster of Cyrus Mistry from the position of chairman of the Tata group in 2016 triggered an ugly public fight between the two sides, which seems to be haunting the conglomorate even 18 months later.
On May 29, India’s premier probe agency, the Central Bureau of Investigation, booked Tony Fernandes, the CEO of AirAsia India, which operates in the country in a joint venture with the century-old Tata group. The CBI’s report makes allegations of bribery, corruption, and violation of foreign investment norms.
While the Malaysia-based low-cost airline denied any wrongdoing by its CEO, the Tata group has said that the charges stemmed from the conflict with Mistry. “It is commonly known that the present accusations qua AirAsia India find their root in baseless allegations made by Mr. Cyrus P Mistry and the Shapoor Pallonji Group against Tata Trusts trustees (me included) and Tata Sons in his ‘revenge’ legal actions,” R Venkataramanan, the Tata group nominee on the AirAsia India board, said in a statement released on Wednesday (May 30).
Venkataramanan, also named in the CBI report, is reportedly responsible for management and oversight of all the Tata Trusts, which own two-thirds of the $100 billion Tata Sons, the holding firm of all the group companies.
The Tata Trusts, too, continue to back Venkatramanan. “Where is the proof he (Venkataramanan) was involved in anything? Firstly, there should be proof that there is some bribe paid to XYZ from ABC. There is no evidence produced. Even if they produce the evidence, where is the proof that Venkat is party to that? Just because he is the representative of Tata Sons, and Cyrus Mistry wants to take his revenge on him because he was thrown out. I don’t see any other reason,” one of the trustees told Quartz, requesting anonymity.
Mistry, in a letter on Oct. 25, 2016, had alleged that, “a recent forensic investigation (at AirAsia India) revealed fraudulent transactions of Rs22 crore ($3.2 million) involving non-existent parties in India and Singapore. Executive trustee, Mr Venkataramanan, who is on the board of AirAsia and also a shareholder in the company, considered these transactions as non-material and did not encourage further study. It was only after the insistence of the independent directors, one of whom immediately submitted his resignation, that the board decided to belatedly file a first information report (FIR).”
On May 29, 2018, the CBI reportedly alleged that AirAsia India remitted about Rs12.28 crore to a Singapore-based HNR Trading for a “sham contract” on the basis of a bogus agreement on plain papers.
The unnamed Tata Trust member delved further into the Mistry episode and his possible role in the CBI case: “From day one, he (Mistry) has been writing long letters. In the first letter itself, he made various allegations against AirAsia and Venkat. That is why this suspicion…(Mistry) has already lost the case at the (National) company law tribunal (NCLT). Again he made an appeal to the appellate tribunal and they again upheld that his petition is not maintainable. So they said give him a waiver on this, and consider his case again. So, the NCLT has heard it again and the judgment is due to come. Is he trying to influence the judgement? I don’t know.”
In any case, the Tata group has a battle at hand and it won’t be an easy one. “The point is that the credibility level for anyone today is so besmudged that people tend to believe even the worst outlandish statements,” the trustee said.
One can only wait for the outcome of the probe now.